When introduced in 2014, Yoga Bar was one of India’s first few ‘clean-ingredient’ food brands. It was launched by two sisters, Suhasini and Anindita Sampath, when the concept of ‘healthy snacking’ was alienated. However, there was a rising consciousness amongst Indians about fitness, which paved the way for the growth of Yoga Bar. 

As a growth marketer and Martech Expert, I’ve closely followed the journey of many startups, but few have captured my attention quite like Yoga Bar. Their story is not just one of success but a masterclass in product-market fit, agile pivoting, and strategic growth. 

Let me share why I believe every growth marketer should study Yoga Bar’s journey.

Background

The inception of Yoga Bar is a story of inspiration and determination. Inspired by the clean-label protein bar trend (like BattleOats) in the U.S., Suhasini, and Anindita saw an opportunity to bring a similar concept to India. Anindita’s casual remark about creating a similar product for India led to the trademarking of the name ‘Yoga Bar.’ After returning to India, they spent three years researching the health food space before launching their first product, multigrain energy bars, in 2015. Their second product, protein bars, followed in 2018, and they ventured into muesli only in 2021. This gradual approach to product development allowed them to focus on perfecting their offerings, working closely with food scientists and bakers to ensure quality and taste.

Market Opportunity

Yoga Bar’s 2014 launch coincided with a significant shift in Indian consumer behaviour, particularly among the 25 to 35-year-old demographic. These are the basic details of the target persona of Yoga Bar

To me, the timing of Yoga Bar’s entry appeared strategic when considering broader market trends. The healthy snacks market grew phenomenally when Yoga Bar was founded ten years ago. 

The Global healthy snacks market value stood at USD 27 billion. The market grew at a whopping 16.2% CAGR to over USD 90 billion by 2022. 

This indicated a global increasing trend driven by emerging markets like India and China. 

I believe several factors contributed to the favourable market conditions:

• A growing fitness culture, with approximately 40% of Indians actively seeking health and fitness-related products
• The rise of food tech startups signalled an increased demand for quick, healthy eating options.
• An evolving FMCG environment that presented opportunities to compete with established confectionery and biscuit brands

While brands like RiteBite and Nature’s Value had entered the market earlier (around 2005-2006), the concept was still relatively new in India. Yoga Bar’s 2014 entry seemed well-timed to capitalise on growing market awareness without facing intense competition.

Yoga Bar was launched in 2014, coinciding with a significant shift in India’s entrepreneurial scenario. During his first year in office, Prime Minister Narendra Modi implemented key policy initiatives such as ‘Start-up India, Stand-up India’ in 2015. This aimed to foster innovation and support new businesses. He further announced the Make in India campaign to boost manufacturing and attract foreign investment. This, combined with his motivational speeches targeting the country’s youth, who make up more than half of the population, positioned Yoga Bar for success in the burgeoning healthy snack market.

Product Strategy and Portfolio Evolution

What struck me most about Yoga Bar’s approach was its founders’ unwavering commitment to product quality over marketing hype, what we can call a good example of Product-Led Growth in the D2C category. Yoga Bar took a different route in a market where many startups burnt their cash with aggressive marketing campaigns. They focused on building robust distribution channels and allowed their product to speak for itself. This strategy, which I’ve seen fail for many others, worked wonders for Yoga Bar. As a growth marketer, I firmly believe that any growth hack will succeed only if the product delivers actual value to its ideal customers, which is evident from Yoga Bar’s growth. Here is a scatter chart showing Yoga Bar’s product launches –

Market Positioning and Competition 

Initially, Yoga Bar established themselves as a healthy snack bar market leader, with a strong focus on physical stores. Before the pandemic, 90% of their sales came from brick-and-mortar locations, reaching over 6,000 stores. 

Yoga Bar has adopted a unique marketing approach that primarily focuses on sampling and trials. The company claims to have relied on smaller packs sent through various channels such as Swiggy Instamart, Big Basket, and in-store promoters to provide customers with a first-hand experience of its products.

The pandemic forced Yoga Bar to pivot. They quickly shifted gears to prioritise online sales channels. This move helped them reach new customers and capitalise on the growing demand for convenient, healthy snacks delivered directly to consumers. Today, their sales are split between online and offline channels, reflecting a healthy balance, with online sales reaching 40%. 

Here, I want to mention one aspect: pivots can make or break a company, especially during uncertain times. For instance, in this case, before the pandemic, their healthy snack bars were a bestseller, with 90% of sales coming from over 6,000 stores. Then came the lockdown. Stores closed, people stayed home, and the future looked bleak for Yoga Bar. But that didn’t deter the founders. They changed their game plan and started selling online. It wasn’t easy, but they found new customers who wanted healthy snacks delivered. This online thing helped them not only survive but actually do well.

‘Jenny Blake, in her book, ‘Pivot: The Only Move that Matters is Your Next One’, describes how pivoting in times of challenges or uncertainty can make all the difference for any business. During the pandemic, many startups drowned in the ocean of lockdowns. Yoga Bar not just survived but thrived.’

Also, Yoga Bar’s ambition continues beyond selling just energy bars. They have a clear vision for further offline expansion, aiming to reach 60,000 stores and a revenue of INR 1000 crores

Beyond their stronghold in the bar segment, Yoga Bar is making waves elsewhere. Not just a bar game anymore, Yoga Bar is taking on breakfast giants like Kellogg’s in the muesli category. This bold move demonstrates their ability to go toe-to-toe with established players and capture a larger share of the healthy breakfast market.

Revenue Positioning and ITC Acquisition

Yoga Bar’s financial performance offers valuable insights for growth marketers. Here’s a breakdown:

While this revenue breakdown may present a healthy growth, the profitability concerns said otherwise.

Profitability Concerns:

With the rapid growth came heavy challenges. While FY22 saw strong revenue growth (75%), it was accompanied by a concerning tripling of losses (nearly Rs 28 crore). Here’s what I think are the potential contributing factors:

• Increased Marketing Spend: Yoga Bar’s online sales push likely involved significant cash burn.
• Product Development: Investments in new product lines might have impacted profitability.
• Operational Scaling: Expansion led to increased operational costs.

Cash Flow Optimization Needed:

The high burn rate (rising losses) necessitates optimising Yoga Bar’s cash flow strategy. While its Rs 18.5 crore cash reserves might seem sufficient, the depletion rate needed massive attention, driving Yoga Bar into the hands of ITC.

ITC acquisition: A strategic move?

ITC’s acquisition of an initial 39.4% stake in Yoga Bar for Rs 175 crore signifies a vote of confidence in the company’s future. This investment implies a valuation of Rs 440 crore for Yoga Bar, demonstrating a substantial increase of 44.7% compared to the Rs 304 crore valuation in February 2020. On May 4th, 2023, ITC acquired a 39.42% stake in Sproutlife (Yoga Bar) by purchasing a common and convertible preferred stock for Rs 175 crore. ITC also plans to acquire 47.5% of the shares by March 2025. 

However, ITC also benefited from this acquisition. 

Faced with rising cigarette taxes since 2017 (right from the introduction of GST in India), ITC, a conglomerate heavily reliant on tobacco revenue, has been aggressively diversifying into FMCG subsectors. Yoga Bar’s acquisition marks ITC’s entry into a new, high-growth category.

The acquisition holds immense potential to propel Yoga Bar’s growth in several ways:

• Enhanced Distribution Network: ITC possesses a vast and established distribution network throughout India. This offers Yoga Bar immediate access to a significantly wider range of retail outlets, potentially expanding its reach beyond its current 6,000+ stores. This expanded reach can significantly increase brand visibility and drive sales growth.
• Marketing Power: ITC’s substantial marketing resources will amplify Yoga Bar’s brand awareness. Yoga Bar can use ITC’s expertise in traditional and digital marketing to solidify its online presence further and try cost-effective Above The Line (ATL) advertising campaigns in the future, enhancing brand recognition and customer acquisition.
• Financial Backing: The ITC acquisition provides Yoga Bar with much-needed financial backing. This can be crucial for fueling their ambitious growth plans, potentially mitigating the need for additional funding options like venture debt. This financial security allows them to optimise their current growth strategy without the immediate pressure of profitability.
• Product Category Expansion: Leveraging ITC’s expertise, Yoga Bar can explore expanding into new product categories beyond healthy bars. For example, venturing into salty and savoury snacks could cater to a broader customer base and further solidify their position in the healthy snacking division.

Strategic Considerations

While the acquisition presents exciting opportunities, I must say some strategic considerations need to be addressed:

• Maintaining Brand Identity: Yoga Bar has cultivated a strong brand identity built on a passionate online community. It will be crucial to ensure that this unique brand voice and connection with its core audience are preserved within the larger ITC framework.
• Integration Challenges: Merging operations and integrating Yoga Bar’s growth strategy with ITC’s existing business model can be complex. Ensuring a smooth transition and leveraging the strengths of both organisations will be key to maximising the benefits of the acquisition.

Overall, the ITC acquisition presents a transformative opportunity for Yoga Bar. They are well-positioned to achieve even greater success with access to a wider distribution network, enhanced marketing muscle, and financial backing. However, careful consideration must be given to maintaining their brand identity and navigating the integration process effectively.

Building a Strong Foundation: Yoga Bar’s Manufacturing and Customer Focus

Yoga Bar’s impressive growth isn’t just about marketing and sales. They’ve established a strong foundation for success through strategic investments in manufacturing and a deep understanding of their customer base.

Let me explain

Yoga Bar’s investment in a 60,000 sq ft facility in Tumkur, Karnataka, showcases its commitment to quality and production efficiency. This sizable space allows it to meet the growing demand for its products and potentially accommodate future expansion plans.

Yoga Bar has clearly identified its target audience—health-conscious millennials and Gen Z consumers. This focus allows it to tailor its messaging, product development, and marketing strategies to resonate with these specific demographics, leading to high customer retention rates.

High customer retention rates are an important parameter for a solid brand-customer relationship. Yoga Bar’s commitment to clean labels and transparency plays a key role in building trust and loyalty with the customers. By clearly communicating its products’ ingredients and nutritional value, consumers are empowered to make informed choices and develop a sense of brand authenticity.

Key takeaways for growth marketers

Some key-takeways that growth marketers can learn from Yoga Bar are:

Product-Market Fit:

• Yoga Bar figured out exactly what people wanted – healthy snacks that taste good and are easy to eat on the go.
• They used clean ingredients and were honest about what’s in their products.
• This made health-conscious people trust them and keep coming back.

Selling Strategy:

• They started by getting their snacks into lots of regular stores. This was smart because:
  • It made their products easy to find.
  • People could see and try their snacks easily.
  • It helped build a loyal group of customers.
• When COVID-19 hit, they quickly started selling online too. This shows they can adapt when needed.

Smart Partnerships:

• Yoga Bar joined forces with ITC, a giant business conglomerate in India.
• This was a clever move because:
  • It helped them reach more people.
  • They could leverage ITC’s business empire. 
  • It opened doors to make new types of products.

Balancing Growth and Money:

• They didn’t just focus on getting bigger. They also:
  • Watched how much they spent on marketing.
  • Found ways to save money on getting their products to stores.
  • Looked for different ways to make money.
• This careful approach helps them stay strong in the long run

Here’s what we can learn from Yoga Bar’s success:

• Understand your customers: Know their needs and why they choose your products. Stay updated on how their preferences evolve.
• Build strong customer relationships: Be transparent about your products, create solutions that genuinely help, and listen to feedback for continuous improvement.
• Use data for smart decisions: Analyse metrics to effectively guide product development and marketing strategies.
• Stay agile: Monitor market changes closely and be willing to innovate and adapt quickly.
• Pioneer innovation: Continuously introduce new ideas and products to stay ahead in your market.
• Establish a healthy online presence: Ensure easy access to your products online and engage customers through social media.
• Focus on long-term growth: Plan strategies that support sustainable business expansion rather than short-term gains.

Drawing from my expertise..

Yoga Bar is a brand that achieved Product Led Growth in the D2C category. Their go-to-market strategies proved effective in supporting growth in both offline and online channels.

Yoga Bar’s story is an inspirational one. Not only did they crack the code, but persistence on part of the Founders has paved their way to glory. No business can survive without the resilience of the team behind it.

The team has to understand the importance and true meaning of pivot. When you are faced with challenges or changes in the status quo, your vision will not change. The path can change. But it will essentially lead you to the same goal you had before.  

Another important aspect is knowing your customer in and out. When you are inside of the office, your environment is completely different from that of the customers. It is important for the team to connect with a few customers at the very least on a personal level to understand their side of the story.

More the brains, more the opinions. This connection or conversation can lead you to uncover the psychology of your customer. What does a person think about the product being offered? What motivates them to pay the money? Is the perceived value by the customer the same as the value we offered? 

I leave you here with these questions to find your own answers. 

References

Banerjee, S. (2022, March 28). Here’s why Yoga Bar is confident of becoming a Rs 1000 crore brand in the next 2 years. Retrieved from https://www.businessinsider.in/advertising/brands/article/heres-why-yoga-bar-is-confident-of-becoming-a-rs-1000-crore-brand-in-the-next-2-years/articleshow/90444499.cms 

Chengappa, B. S. (2021, July 9). Yoga Bar plans ₹25-crore manufacturing facility. Retrieved from https://www.thehindubusinessline.com/companies/yoga-bar-plans-25-crore-manufacturing-facility/article35235167.ece#:~:text=Indian%20healthfood%20brand%20Yoga%20Bar,the%20outbreak%20of%20the%20pandemic. 

Healthy snacks: market value worldwide 2021-2030 | Statista. (2024, May 22). Retrieved from https://www.statista.com/statistics/1317251/healthy-snacks-market-value-worldwide/ 

Jagannath, J. (2023, May 5). ITC buys 39% stake in Yoga Bar owner, Sproutlife Foods, for Rs 175 cr. Business Today. Retrieved from https://www.businesstoday.in/latest/corporate/story/itc-buys-39-stake-in-yoga-bar-owner-sproutlife-foods-for-rs-175-cr-380156-2023-05-05 

Kishore, G. N. (2023, July 12). Yoga Bar: a contrarian growth story. Retrieved from https://thehardcopy.co/brand-case-studies-yoga-bar/ 

Mishra, S. (2022, April 12). Yogabar registers 150% growth in revenue in FY22; online channels account for 50% of the overall sales. Financial Express. Retrieved from https://www.financialexpress.com/business/brandwagon-yogabar-registers-150-growth-in-revenue-in-fy22-online-channels-account-for-50-of-the-overall-sales-2488561/#:~:text=Health%20food%20brand%20Yogabar%20claims,Covid%20period%20has%20been%20phenomenal. 

Mukherjee, W. (2023, January 17). ITC to acquire Yoga Bar to expand presence in fast growing healthy foods space. The Economic Times. Retrieved from https://economictimes.indiatimes.com/markets/stocks/news/itc-to-acquire-sproutlife-foods-to-strengthen-presence-in-nutrition-health-foods-space/articleshow/97064425.cms?from=mdr 

Pti. (2022, February 18). Covid effect: Indian consumers now more conscious of health, fitness and holistic nutrition, says EY survey. The Economic Times. Retrieved from https://economictimes.indiatimes.com/news/india/covid-effect-indian-consumers-now-more-conscious-of-health-fitness-and-holistic-nutrition-says-ey-survey/articleshow/89659176.cms?from=mdr 

Shrivastava, A. (2023, May 5). What drove Yoga Bar into ITC’s arms | The Arc. Retrieved from https://thearcweb.com/article/what-drove-yoga-bar-into-itc-arms-39-stake-D2C-brands-CcAuxgJKM8ZaHV52 

Thaker, N. (2022, April 21). How the Sampath sisters’ Yogabar brought healthy snacking to India. Retrieved from https://www.forbesindia.com/article/2022-d2c-brands/how-the-sampath-sisters-yogabar-brought-healthy-snacking-to-india/75549/1 

Featured Image Retrieved from 

https://www.businessinsider.in/advertising/brands/article/heres-why-yoga-bar-is-confident-of-becoming-a-rs-1000-crore-brand-in-the-next-2-years/articleshow/90444499.cms